Get America Working Again

Obama ran on a platform of “Hope and Change”.  After he was elected that we found that hope and change meant a trillion dollar stimulus program, Obama Care, Cap and Trade, Dodd-Frank, a halt in drilling, massive EPA regulations on business and the coal industry, NLRB restrictions on new factories, CPSA restrictions on small business, Card Check, the threat of new taxes,  9.2% unemployment and massive public debt.  Rick Perry is running on a platform of “Get America working again”. What is that likely to mean?

The problem: employers are not hiring 

To begin with, the problem is not that people are unemployed. In a rising economy, unemployed workers are a valuable resource. Entrepreneurs, seeking to make profits, will be delighted to find work for these people. Unemployment exists only if there is some restriction on business that keeps them from hiring these valuable workers. In the past three years, the Federal Government has put in place hundreds of restrictions on business that prevent them from expanding and hiring more people. A new administration will have to find out what these restrictions are, and find ways to remove them. Once that is done, entrepreneurs, interested not in the welfare of the unemployed, but in increasing their own business and profits, will solve the national unemployment situation.

Regulations preventing job growth

During last three years, hundreds of regulations have been issued which make it difficult or impossible to hire more workers. Here is a short summary:

  • The oil and gas industry has been hit by massive restrictions on drilling and expansion.
  • Access to the Alberta Oil Sands through a pipeline to Texas has been held up by environmental concerns. This pipeline could employ 100,000 and lead to North American oil independence.
  • The coal and electrical generating industries have been hit my crippling EPA regulations.
  • The minimum wage law has been increased, in the midst of a recession, which has prevented a half a million young people from getting their first job.
  • Extending jobless benefits to 99 weeks increases the number of unemployed.
  • The new health care law has created such problems and uncertainty in hiring new workers that more than 1000 companies like McDonalds have been granted waivers from its provisions.
  • Medicare and Medicaid entitlements will bankrupt the US economy unless changed.
  • A leading company, Boeing, has been prevented from opening a new billion dollar factory in South Carolina.
  • For three years, the President has actively called for higher taxes on the 4 million people who run businesses (“millionaires and billionaires who make $250,000 or more per year”), increasing their uncertainty that they could realize profits by further investment and hiring.
  • The 2,400 page Dodd-Frank law could cost business more than $1 trillion per year in compliance costs.
  • The compliance costs of the complex Federal Income Tax in 2011 is estimated at $392 Billion, keeping businesses from producing profitable output and hiring more productive workers.
  • Baseline budgeting boosts Federal spending by 10 -14% per year making a balanced budget or paying down on our debt almost impossible. High spending and the debt makes it hard to start or grow businesses.
  • The United States has the highest corporate tax rate (35%) in the world.
  •  U.S. multinationals have more than $1 trillion in profits stashed in overseas subsidiaries waiting for approval to repatriate them.

 What should be done?

The problems are so massive that they could overwhelm a new administration that wanted to get America working again. It will take a full four years to enact legislation and restrain the executive agencies, boards and commissions that have put these restrictions up in the first place. In summary, here is what needs to be done:

  • Repeal the Obama health law.
  • Enact the Paul Ryan budget concerning Medicare and Medicaid.
  • Enact the recommendations of the National Commission on Fiscal Responsibility and Reform to completely revamp the current Internal Revenue code to keep revenue the same, but lower tax rates, reduce the deficit, simplify the tax code, reduce the tax gap, and make America the best place to start a business and create jobs.
  • Free up the oil and gas industry to permit drilling anywhere that it is possible in the US onshore or off shore, on private or federal lands.
  • Grant permits to build the Alberta to Texas pipeline.
  • Repeal the Dodd-Frank law.
  • Reign in the EPA to restrict it to assuring clean water and air. Do not allow EPA to put in place regulations based on carbon dioxide restrictions which are not called for in their legislation.
  • Eliminate capital gains taxes. Permit overseas profits to come home so that they can be invested in expanding domestic business.
  • Repeal the Congressional Budget Act of 1974 law that established baseline budgeting. Issue a balanced budget starting immediately. Two years from now, begin to pay off the national debt.
  • Put no Federal restrictions on where US businesses can build domestic manufacturing plants, subject only to restrictions within each state.
  • Eliminate the Federal Minimum Wage law. Leave such matters up to the states.
  • Reduce jobless benefits to their normal six months.

 The importance of a mandate

 To make all these changes, a new President has to assure the Congress and the American People that he was elected to do these things.  Obama surprised many people with his programs because “Hope and Change” was so vague that few knew what it meant.  “Get American working again” is much more specific, but millions will not realize exactly what the new President plans to do.  He will be attacked by the mainstream press for going beyond his mandate. Politicians are often vague on their legislative plans to avoid detailed questions during the campaign. To get the moral authority to back up his plans, each of the above should be mentioned at some time during the campaign. They should not come as a surprise if he expects to get them done.

He should resist the temptation to set up a new board or commission to recommend all of these changes.  We already have had dozens of such commissions. We know what needs to be done. What we need is an executive who already knows what to do, and acts to get them done.

For further reading:

An excellent summary of what needs to be done can be found at the Cato Institute http://www.cato.org/store/books/cato-handbook-congress-policy-recommendations-108th-congress-paperback-0

 

About Arthur Middleton Hughes

Arthur is currently Vice President of The Database Marketing Institute based in Fort Lauderdale, FL. Arthur is the author of 11 books, the latest of which is Strategic Database Marketing 4th Edition (McGraw-Hill 2012). A BA graduate of Princeton with an MPA in Economics and Public Affairs, Arthur taught economics at he University of Maryland for 32 years. He is an Austrian Economist.
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One Response to Get America Working Again

  1. Dudley Foulke says:

    I like this presentation of a plan to get America working again. I wish that onee or more of the Republican Candidates would put forth a plan like this. Too many of them just make speeches. They are afraid to put something in writing that the mainstream press might attack. Let’s see some specifics.

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